Holy Family Memorial Medical Center has withdrawn from the Wisconsin Hospital Association in a dispute over the association's lobbying effort to kill the state's year-old capital expenditure review law.
David Semple, administrator of 214-bed Holy Family, also has charged the WHA board with being subservient to expan-sion-minded systems led by six-hospital Aurora Health Care, Milwaukee, by voting in favor of abolishing the state agency that oversees the CER program.
Like other urban-based systems, Aurora has been extending its regional network to rural areas through affiliations with smaller hospitals and group practices. A spokeswoman for Aurora denied that the system has unduly influenced the 127-member WHA, although it has been outspoken against CER.
Last year, Aurora acquired 53-bed Two Rivers Community Hospital, which is located eight miles from Holy Family in Manitowoc County, setting up a competitive battle with Holy Family for patients and physicians.
"If you are (a hospital) in an urban area and desire to expand, you want public oversight (CER) abolished," Mr. Semple said. "If you are in a rural area (and want to build your own network), you are against it."
Wisconsin abolished its certificate-of-need program in 1987 after a three-year experiment that the WHA said stifled hospital development. But over the next five years of deregulation, spending on hospital construction projects increased 15% to 20% a year, state officials said. Revenues and hospital profits doubled during those years, the officials said.
In 1992, the state Legislature approved the new CER program and the establishment of the Cost Containment Commission in an attempt to restrain hospital spending and limit price increases. CER requires review of hospital capital expenditures of more than $1 million and for medical equipment or services costing more than $500,000.
During the 15-month period before the commission became effective on July 1, 1993, hospitals were required to submit plans with the state for informational purposes only. Hospitals proposed 126 projects worth $635 million to beat the regulatory deadline for review.
The WHA and Aurora said they want the CER program dismantled because it adds unnecessary costs and time to hospital projects and runs contrary to healthcare reform, said representatives for the organizations.
"We see it as another bureaucratic obstacle to a free-flowing system and an administrative and financial burden to hospitals," said Alan Chechick, the association's vice president for communication and education.
Holy Family disagrees. Mr. Semple said CER helps safeguard the public from excessive duplication that can lead to unnecessary price increases.
On Feb. 25, Holy Family formally canceled its membership with the WHA. Mr. Semple personally mailed back the hospital's dues invoice of $24,237.
Mr. Chechick said no other hospital has withdrawn over the CER issue. He added that another hospital also withdrew from the WHA this year over a different issue that he declined to divulge.
Mr. Semple said other hospital administrators support his hospital's position. The Lake Michigan Council, one of the WHA's eight districts, unanimously voted to support CER earlier this year, he said. But the WHA's other districts recommended abolition of CER, Mr. Chechick said.
"Many administrators told me privately that they wanted to vote our way but (couldn't because they) are part of a larger network and the corporate office told them how to vote," Mr. Semple said.
Mr. Chechick acknowledged that systems uniformly support abolition of CER, but he said small and rural hospitals also support the association's position. He added that only a few hospitals oppose the WHA's plan.
"Holy Family sees CER as a buffer to encroachment by Aurora," Mr. Chechick said.
To put pressure on the WHA, Mr. Semple has mailed letters to dozens of administrators in Wisconsin suggesting that CER is a good cost-containment program and doesn't hinder hospitals' delivery reform effort.
Mr. Semple also has thrown his support to the efforts of two state legisla-tors who want to toughen and expand the CER law in the 1995 session.
During the commission's first year, only one CER request has been turned down and another partially denied, said Michael Corry, chairman of the Wisconsin Cost Containment Commission, which oversees the CER program.
Of 14 CER requests considered to date, nine have been approved, one partially approved, three were withdrawn and one denied, Mr. Corry said. Twenty-six projects are under review, Mr. Corry said. Eighteen of the requests are capital expenditure projects worth $40 million, he said.
The commission's lone denial was for a home healthcare agency not affiliated with a hospital. It partially denied half of one project that would have expanded 232-bed Froedtert Memorial Lutheran Hospital, Milwaukee, at a cost of $2.3 million, Mr. Corry said.
While Holy Family is waging a policy battle with the WHA, it also is waging a market war with Aurora in Manitowoc County over patients and physicians.
Holy Family is a Roman Catholic hospital in Manitowoc, 90 miles north of Milwaukee and 45 miles east of Green Bay. Three years ago it merged with Manitowoc Memorial Hospital to form Holy Family Memorial. In 1993 it reported operating income of $2.9 million on net operating revenues of $45.6 million.
Since the 1991 merger, Two Rivers, Manitowoc County's third hospital, which had considered a three-way merger with Holy Family and Memorial, has affiliated with Aurora out of concern for its survival, said Diane De La Santos, Aurora's spokeswoman.
Over the past year, Holy Family and Aurora have been competing for control of five primary-care physician groups located in Manitowoc County.
Holy Family has acquired one group with five physicians and Aurora has acquired another with 14 physicians. Both are seeking the other three groups, which account for the county's remaining 24 primary-care doctors.
"The urban conglomerates look out to rural communities to purchase primary-care practices so they can feed those patients from rural areas," Mr. Semple said. "It's not good for us and our patients."
Ms. De La Santos said Aurora is simply helping its Two Rivers hospital compete more effectively. She said physicians affiliated with Aurora in Manitowoc admit their patients to Two Rivers and Holy Family.
She said patients could be referred to Aurora's tertiary hospitals in Milwaukee if the local hospitals don't have the clinical services. "We are there to increase local access," she said.